Mongolia eyes economic boost from China president's visit

ULAN BATOR/BEIJING Aug 21 (Reuters) - Chinese President Xi
Jinping arrived in Mongolia on Thursday for a two-day visit
designed to deepen economic ties between the neighbours, with
Mongolia desperate to kickstart its struggling economy with
fresh investment.

Xi's arrival marks the first Chinese presidential visit to
Mongolia in 11 years, and Mongolia, hit by plunging commodity
prices and a rapid decline in foreign investment, is keen to
agree to new deals on transportation, energy and mining
investment with its dominant trading partner.

In an article written by Xi for publication in Mongolian
newspapers, the Chinese president said the country would do all
it could to help Mongolia develop.

"China hopes that both countries can push cooperation on
building inter-connecting railways and roads, the development of
mines and processing ... so that people in both countries can
receive even more benefits," Xi wrote.

China already buys more than 90 percent of Mongolia's
exports, mainly of coal and copper, and 49 percent of foreign
enterprises registered in Mongolia are Chinese, Xinhua news
agency reported on Thursday.

But while the focus is likely to be on economic cooperation,
persistent Mongolian worries about Chinese political hegemony in
the region make a bigger breakthrough unlikely, analysts said.

"I don't think right now is the time to talk about
breakthroughs in relations - the Mongolian economy is in a
difficult situation but it isn't difficult enough to have any
immediate impact (on relations)," said Sumati Luvsandendev, head
of the Sant Maral Foundation, a local polling organisation.

Mongolia aims to use its mineral wealth to modernise its
isolated pastoral economy, but it has struggled to fund its
plans. Legislation aimed at restricting foreign ownership in
"strategic" sectors has also deterred foreign investment, which
fell 70 percent in the first half of 2014.
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